Lower Monthly Payments Mean Leasing is on the Rise
Automakers have had strong new car sales so far this year, and an increasing number of leased 2013 vehicles may be part of the reason why more customers are driving cars off of dealer lots. A press release from Edmunds.com indicates that leases comprise a quarter of new car sales so far this year. That would be a 3 percent increase compared with 2012 if the trend continues.
“Lease offers have become more important to automakers’ and dealers’ sales strategies,” says Edmunds.com Sr. Analyst Jessica Caldwell. “Luxury brands have for a long time relied on leasing to maximize their sales volumes. Now mainstream brands are riding that wave, drawing buyers with the promise of lower monthly payments through leasing.”
While getting more vehicle for less money is an attractive proposition, leasing makes sense for some, but not all, new car shoppers. Edmunds.com points out that if you plan to hold onto a car for at least six years, buying a used car will generally be less expensive than leasing or purchasing a new vehicle. Additionally, leasing doesn’t make sense for car shoppers who want to go without a monthly payment, or those that want to own a vehicle that they can sell or trade-in down the road.
However, in some instances it is possible to make money off of a leased vehicle. If a leased car is worth more than its buyout amount at the end of the lease, the lessee can buy the car for far less than the current market value. Additionally, lessees can also leverage that equity against a new lease or purchase if they plan to trade their vehicle in. There are also potential tax benefits associated with leasing for some new car shoppers if they use their car for work.
While leasing isn’t necessarily better than buying (or vice versa), understanding the differences between each option should help car shoppers make an informed buying decision.
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